Canada Consumer Confidence Gains for Second Week

Canadian consumer confidence rose for a second week as prices for commodities including crude oil and gold advanced and optimism about job security surged to the highest in four months.

The Bloomberg Nanos Canadian Confidence Index (SPTSX) rose to 57.6 in the week ending Feb. 21 from a previous reading of 57.1. Consumers’ views about the national economy and personal finances also improved, the survey data show.

Canadian equities rose for 13 straight days through Feb. 20, the longest streak since 1995, propelled by an 18 percent jump in raw-materials stocks as gold gained for a third week and crude advanced to a four-month high. The Standard & Poor’s/TSX Composite Index is the best-performing among the world’s 10 largest equity gauges with a 4.3 percent advance this year, data compiled by Bloomberg show.

“Rising demand for oil and oil prices over the past few months is likely filtering through the economy and bolstering confidence,” said Joseph Brusuelas, senior economist at Bloomberg LP in New York. Canada is the largest supplier of crude to the U.S., the world’s biggest economy.

Canadian employers added 29,400 jobs in January, pushing the unemployment rate down to 7.0 percent, Statistics Canada reported Feb. 7. The proportion of respondents who see their jobs as secure or somewhat secure increased to 67.5 last week, the highest since Oct. 11 and up from 66.6 the week prior.

Poloz Encouraged

The Bank of Canada projects the world’s 11th largest economy will return to full capacity over the next two years as strengthening demand from the U.S. boosts exports and encourages businesses to invest. Governor Stephen Poloz said on the weekend he was encouraged by inflation data that was stronger than forecast, and signs of business creation.

Canada’s inflation rate accelerated the most in 20 months in January on a surge in home heating costs, Statistics Canada reported Feb. 21, curbing expectations the central bank may cut its policy interest rate to move inflation up toward its target.

The inflation reading was “a little bit more” than the bank was expecting,’’ Poloz said in Sydney, where he was attending a meeting of policy makers from the Group of 20 nations. The acceleration was “a little bit reassuring. It’s been hard to explain why inflation is so low.”

Statistics Canada will report gross domestic product for the fourth quarter of last year on Feb. 28. Economists (CGE9ANN) surveyed as of Feb. 21 estimate output grew 2.6 percent in the last three months of the year, according to the median response.

Budget Balance

The two-week surge in consumer confidence, which followed a month-long decline, was also boosted by media coverage of the federal government’s Feb. 11 budget, which projected Canada will record a surplus next year, said Nik Nanos, chairman of Nanos Research Group. “It is too early to see if this is a short term phenomenon or a new trend,” he said.

Confidence grew last week even as reports showed retail and wholesale sales were weaker than expected in December. Canadian retailers ended 2013 with their biggest one-month drop in a year after severe weather hampered sales, Statistics Canada reported Feb. 21.

Consumer sentiment had been deteriorating since the start of 2014, tracking losses in the nation’s dollar. The loonie, as the currency is sometimes known, advanced 0.5 percent versus its U.S. counterpart in February. It’s still the worst performer this year among Group of 10 countries, down 4.1 percent.

Secure Employment

The share of respondents who say their personal finances are better off over the past year rose to 19.0, the highest in a month, from 18.0 the previous week, according to the Nanos survey. Those who expect the Canadian economy to improve in the next six months rose to 18.2 percent of respondents from 17.3 percent.

The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months fell to 37.6 percent last week from 38.4 percent, while those predicting declines fell to 10.4 percent from 11.5 percent.

Optimism grew in Canada’s most-populous provinces -- Ontario, Quebec and British Columbia -- and declined elsewhere.

Bloomberg Nanos’s confidence index has two sub-indexes: the Pocketbook Index, based on survey responses to questions about personal finances and job security, and the Expectations Index, based on responses on the outlook for the economy and real-estate prices.

The Pocketbook Index rose last week to 60.1 from 60.0, while the Expectations Index rose to 55.1 percent from 54.2.

The Nanos data are based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate within 3.1 percentage points.

To contact the reporter on this story: Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editor responsible for this story: Paul Badertscher at pbadertscher@bloomberg.net

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